Yahoo introduces its much-awaited ad technology
02/08/2007|4:00:00 PM|Eyefortravel
Yahoo has upgraded its search advertising system, an initiative to close the gap with Google in the race for search advertising dollars. (2/6/2007)

It is being said that the much-delayed ad system, known as Project Panama is Yahoo’s attempt to place ads in front of users that are more likely to be clicked on. Until now, Yahoo gave top billing to the advertisers who were willing to bid the most to have their ads listed alongside a particular search result.

As per the information available, Yahoo finally moves from the pure “highest bidder wins” model to the “bid plus quality” model. By making this switch, Yahoo hopes to increase the average revenue per click from 2.5/3 cents to something closer to Google’s 4.5/5 cents.

“You are talking about something that could potentially affect the single largest and most profitable business segment that Yahoo has,” said Mark Mahaney, an analyst at Citigroup, reportedly said.

“Yahoo’s search-engine makeover has been delayed several times but is considered so significant for the company’s future that executives code-named it Panama, after the canal. In the past few years, Google has continued to dominate the market for Internet ads, in part because its technology served up more relevant, and therefore more lucrative, ads. This forced Yahoo and Microsoft’s MSN to overhaul their search engines to try to match Google,” according to Washington Post.

It also reported: “The project at Yahoo required rejiggering the engine that determines which “sponsored links” are placed at the top or to the right of Yahoo´s search results. Until yesterday, Yahoo positioned ads by highest bidder, so sometimes the top results were not the most relevant ads. Now, Yahoo will rank ads, similar to what Google does. Yahoo will place ads based on both the bid price and measures of the relevance of the ad, such as how often someone clicks on it. Yahoo’s new engine will also allow advertisers to focus their campaigns by location of the Internet user and other demographic data, features that have been offered by the company´s competitors for some time.”